When applying for any type of business loan, the APR is an important factor to con-sider, as it affects the total repayment amount, including origination fees and monthly upkeep charges.
The APR for your small business loan represents the total cost of your loan on an annual basis. If you're taking out a loan to fund your company's growth, it's crucial to weigh the small business loan APR as part of the overall cost.
Similar to fixed or variable interest rates, business loan APRs can either be fixed or variable. While a variable business loan APR could be lower than loans with a fixed rate APR, opting for a variable rate means that your APR is subject to change.
Lending to small businesses is risky for banks. Since lender's funds are less secure when they lend to small business owners, small business APRs tend to be somewhat higher than those for personal loans.
Many business loan lenders offer competitive APRs to attract new customers, so it's prudent to compare rates. Here are the average business loan APRs of some popular lenders:
American Express: 6.98% to 19.97%
Wells Fargo: 7.00% to 22.99%
SBA Loans: Varies between Prime Rate + 2.25% and Prime Rate + 4.25% depending on term length and business revenue amount.